After all
the governmental and political exercises the national budget has come up. Since
the establishment of the government, the main focus of the government has to be
the preparation of constitution through the constitution assembly. But the
obstacles were abundant to disrupt the procedure. The ruling parties have
provided their shares in the formation of the government and the governmental
responsibilities. The opponents are trying to get involved in the government
through various means, either by forming up groups or the party as a player.
They have been trying to fulfill their own demands and needs. Though there have
been obstacles from non ruling parties to fulfill their demands for the budget allocations,
the budget have come up. For the first time in history of Nepal, the budget has
been leaked out before the formal announcement.
Every
year the country gets a new finance minister and similarly the budget
allocations. Most of the budget either gets frozen or they are being misused
the whole year. Let’s see what we have on our plates.
As the tradition
follows the budget has been based on the government plans and policies of
Nepal. The gets allocated in the same heads and the income and expenditure are
maintained accordingly. As expected, the budget has gone up in amount though
with the deficit budget funding. The budget has been a deficit budget with
plans to collect from the foreign loans and financial support. Overall the
budget seems to made up without proper studies and considerations. It seems weak but some of the points are
quite good but they lack far sightedness and fails on the ground of
practicability.
Due to
the various political and economic situations the production and distribution
has gone low in the country. The distribution of means and measures are unfair.
Most of the products and services are city centered. The budget has been
focused on creating employment opportunities in the economy by establishing a
foundation for development that is based on social justice that is balanced and
inclusive. In this regard, enhancing production and productivity in
agricultural and industrial sectors, promoting investment of private sector in
industry and infrastructure, reducing poverty and inequality by fairly
distributing the available opportunities will be the major thrust of the
budget. Nepal’s economic condition has
been deteriorating since years and we have not seen any developments in the
economy of the country. The government has targeted the economic growth rate of
3.5% for this Fiscal Year. But it seems not that near to be achieved with all
these situations of the country. The government persists that the inflation has
gone down to a single digit and will diminish in the days to come, that’s very
tough either. The imports and export has gone up during the last Fiscal year
period. The government claims that we do have good reserves for foreign
trading.
The Revised
total expenditure of the current Fiscal Year is estimated to be Rs. 306.27
billion. Current expenditure is estimated to be Rs. 180.14 billion, capital
expenditure Rs. 108.08 billion, and principal repayment Rs. 18.04 billion. Even
though the size of the total budget has been increasing continuously,
availability of budget for capital expenditure is squeezing because of the
rapid rise in current expenditure. At the same time, absorptive capacity of
foreign aid has also been gradually eroding. The next Fiscal Year budget needs
to be focused towards achieving a higher growth rate by improving macroeconomic
indicators, expanding capital market and enhancing confidence, promoting
private sector investment by expanding physical and economic infrastructures,
and focusing economic activities in the productive sectors. The budget has been
claimed to lead the country in the paths of economic development.
To
implement the policies and programs of the budget during the Fiscal Year
2011-12, it has been proposed a total appropriation of Rs. 384.90 billion.
According to the new classification of Government Finance Statistics, the total
appropriation for recurrent expenditure is proposed to be Rs. 266.61 billion
which is 69.27 percent of the total budget. Likewise, government has
appropriated Rs. 72.61 billion for capital expenditure which comes to 18.86
percent of the total budget. Under the
Financing, a sum of Rs. 25.38 billion (6.6 percent) has been allocated for loan
and share investment, and Rs. 20.3 billion (5.27 percent) for repayment of
principals. The total appropriation
proposed for the next Fiscal Year is higher by 25.67 percent compared to
revised estimate of this Fiscal Year.
Under the existing arrangement, recurrent and capital expenditure will
amount to 56.08 percent and 38.64 percent, respectively, whereas the 62 repayment
of principal amount will be 5.28 percent of the total expenditure. Out of the
total appropriation, it has earmarked a total of Rs. 202.56 billion (52.62
percent) for developmental programs whereas for recurrent expenditure a sum of
Rs. 182.34 billion (47.38 percent). Of
the total sources of financing to meet the expenditure proposed for the next
Fiscal Year, a total of Rs. 241.77 billion will be met from revenue, Rs. 5.93
billion from repayment of principal amount and Rs. 70.13 billion from foreign
grants, leaving a deficit of Rs. 67.06 billion.
Of this deficit, Rs. 29.65 billion will be met from foreign loan and
remaining Rs. 37.41 billion from domestic borrowing. Thus as the budget speaks up, it is a deficit
budget. The total budget has been under deficit condition in years and it might
continue in the days to come as well. Since we are all set to borrow up the
money for the running of the country, if we cannot collect the required sum o
money then there will be total economic disruption. This disruption will lead
to the budget switching among the required allocation units leading to a
budgetary and planning failure. We could see lack of proper planning and
allocation of funds in the various sectors of the economy. The most important
part was inability to focus on the necessary sectors and distributing more to
the more sectors.
The
government has formulated various programs in the various sectors of economy
such as agriculture, industry, tourism, development, education, health and
social services. The programs are well focused but still the plans matters. The
budget allocation matters with the headings and expenses and the social
justice.
The
conflict handling and social welfares have been put forward in the current year
budgetary headings. Since the formation of constitution, sustainable peace keeping
and rehabilitation of the Maoist cadres has been the motto of this government,
the obstacles are to be handled carefully. The budget has made allocations for
the underdeveloped and poor tribes of people. They are to be provided with
various fasciitis and their development has been focused. The allocations have been
designed to help out the people under the terms of castes, religions, social
beliefs and norms of the localities. The remote areas and sectors of the
country have also got their shares of the budget. It also has devised the new municipalities.
There are also the subsidies and facilities for the least developed areas,
women, single mothers, and lest developed groups of people. The land could be transferred from the male
owners to the female owners at low costs, special allowances for the least developed
women. The government has allocated Rs. 73.33 billion for the women welfare.
The the question persists, will it be on the targeted hands? The Madhesis,
Badis, and people affected by various sorts of violence are given priorities
and the budget has been allocated for their welfare.
The
purchase and sales of the land and real estate have been made more legalized
and rules governing them will be tightened. The agriculture and related
services will be subsidized and various fasciitis such and fertilizers,
equipments, technical support and issues will be provided mode handy to the
farmers. New breeds of crops will be produced and supplied to the public with
proper studies so that they could get a better result from their harvests.
Places feasible for horticulture will be developed as pocket area.
"One
Village One Product" program has been set up by the government. It has
arranged to provide 50 percent subsidy on the capital expenditure to the small
farmer cooperative institutions in the purchase of machinery and equipment for
processing cardamom, tea, coffee, ginger, nut and honey. The commercialization
of the products has been focused. Another most important part covered in this
years budget is the cooperative movement. Cooperatives will be established as
strong pillar by building inclusive economic base and utilizing local
resources, capital and labor. Special
grants and facilities will be provided through a co-operative trust for
backward classes, caste, sex, conflict affected, martyrs' families, landless and
informal sector workers to get involved in economic activities. Customs tariff
will be exempted on the basis of project viability for bus and tax operation in
Kathmandu valley and urban areas through the establishment of cooperative
formed with the involvement of transport workers. A sum of Rs. 10 Million will be provided to
construct the central office building of National Cooperative Federation.
The most
important decision under any budget in Nepal is the tax of the vehicles, import
and purchases, both four wheelers and four wheelers. This time the government
has left the vehicle taxes untouched for this year. This is due to the fact
that the previous year’s tax increment has led to the low purchase and sales of
vehicles leading to the overall low tax collection. To open the track, to improve
the opened tracks and to begin the black of various roads, more budget has been
allocated. Budget has been allocated for the construction and renovations of
various roads and highways. Around Rs 6.5 billions have been allocated for the
roads. Budget have been allocated of Rs.
80 million for the construction of Seti Highway and Mahakali Highway.
Additional budget for regional roads has also been provisioned. The current traffic problems will be eased by
the lane extension in the entry points of the major cities including the
Capital one and the upgrading of inner roads within the cities. Construction
works of Fly-over in Kathmandu will be expedited. There will be flyovers and
Metro Trains in Kathmandu. With a view to expanding the tourism business, tourism
roads are being constructed from the current fiscal year. Necessary
arrangements will be made to accomplish those in a timely manner. Additional
budget is allocated for the tourism roads.
The most amazing plan for this year budget is the establishment of Metro
trains in Kathmandu valley. For the construction of road-bridges in highways
and other roads connecting the district headquarters budget have allocated Rs.
2 billion.
In view
of making transport services in urban roads including Kathmandu and highways
more safe and comfortable through the implementation of regular, recurrent and
casual maintenance, reconstruction and rehabilitation works in planned manner, government
have allocated Rs. 3.10 billion. 99. Necessary budget is allocated to initiate
the development of waterways in the big rivers including Koshi. Arrangement will be made to operate big
physical infrastructure projects through a separate institutional mechanism. New
fast tracks, railways and airports have been declared for the easy
transportation.
The most
important part of human life and most problematic services of Nepal is
electricity. Lets see what we have in the sectors of electricity. High priority
has been given on energy development. New hydropower and sustainable planning
have been set up. With a view to set up an effective mechanism for the
enhancement of investment in energy sector by mobilizing domestic and external
resources, a Hydropower Development and
Investment Company, with a paid up capital of Rs. 8 billion, has already been
registered. A Master Plan on hydropower
development will be prepared. To assess the total hydropower potentials, a
study will be initiated from next year and will be updated every 10 years. For
this, bilateral and multilateral assistances will be mobilized. Private sectors have been encouraged to
invest in the power sectors. Additional study and implementation process will
be expedited on the reservoir projects including West Seti (750 MW), Tamor (550
MW), 22 Nalsingaad (400 MW), Uttarganga (300 MW), Aandhikhola (180 MW), Upper
Seti (127 MW), Indrawati (91 MW), Kankai, Karnali, Chisapani, Dudhkoshi,
Bagmati, Nisdipanaha, Kaligandaki and Likhu-5. Essential arrangements including
funding have been made for 456 MW Tamakoshi Hydropower project, a topmost
prioritized project of the country. The major civil construction work of this
project has already started from the current fiscal year. The plant will be
completed by 2014.The Construction work of Rahughat, Kulekhani III, Chameliya
and Upper Trisuli-3"A" will be accelerated. Internal resources will
be made available for the construction of
Upper Modi "A" and Upper Trishuli-3"B" from the
coming fiscal year. The construction works on ongoing plants and transmission
projects will be accelerated.
Feasibility study of Tamakoshi V will be completed within the coming
fiscal year. The present Government will give priority to Pancheshwor project which
will be implemented under support of the Indian Government.
"People's Hydropower" programme will
be implemented with the direct involvement of local bodies and other public
institutions. A policy of investing the reserve and capital of the cooperatives
will be implemented in the hydropower generation and distribution. A new
hydropower project will be implemented by civil employees' share investment
from their one month salary contribution paid in 12 installments within a year.
To implement "People's Desire, of a
Bright City" programme, modern energy efficient street light will be
installed in major cities including the Kathmandu. A total of 4500 kilowatt
electricity will be generated through the micro and small hydro power project
with the individual plant capacity up to one Mega Watt to provide electricity
facility to the denizen of remote area, still not having access to national
electricity grid. Electricity will be provided to 6500 households through solar
energy by fixing solar. To reduce the electricity leakage, government has arranged
to launch a campaign with a slogan "Stop Electricity theft, Make Civilized
Society". The plans smell good but
the result will depend on the implementations. Otherwise we will be having the
blackouts for the long run. Thought the plans have been made good but there
might be absence of ideas and strategies to cope with the ever increasing
demands of power.
Youth are
the pillars of country. They are the ones who run the country and they should
be all prepared to steer the country in the right track. The youth will be
provided with various skill development training and investment opportunities.
Special
programs will be arranged to attract both domestic and foreign investment for
the development of water resources, tourism and infrastructure sector. Arrangements
will also be made to ensure facilities to be accorded to industries as per the
provisions made in the Industrial Policy 2010, and necessary legal arrangements
including acts will be enacted to promote both domestic and foreign private
investment in the industrial sector.
Special
campaign will be launched with a view to exploring and utilizing precious
metals, minerals, oil and gems or precious stones scattered across different
parts of the country. Natural gas, which has been explored in Kathmandu, will
be piloted and made operational based on an action plan. Measures related to liquidity management,
reforms in the capital market, balanced expansion of banks and financial
institution and control of financial crimes will be expedited. In this regard,
corporate governance will be maintained to enhance trust upon banks and
financial institutions. Banks and the financial institutions with Government
involvement will be restructured with necessary capitalization.
Monitoring
and supervision of banks and financial institutions will be made effective by
enhancing the capacity of Nepal Rastra Bank, Nepal Security Board and Insurance
Board. The High Level Financial Sector Coordination Committee will be made more
active. 222. Effective from next Fiscal
Year, Nepal Rastra Bank will make an arrangement whereby any depositor
(individual, company or entity) depositing more than or equal to Rs. 1 million
in a bank or financial institution will have to make a self declaration that
the money being deposited is not earned illegally from sources such as
terrorism, drug and human trafficking, and organized crime. A provision will be made in which Nepal
Rastra Bank in association with Department of Cooperatives will carry out
supervision and monitoring of saving and credit co-operatives with annual
transactions of more than Rs 50 million. Access to quality education for all
will be ensured.
Basic
education will gradually be made mandatory. Arrangement will be made to provide
free education up to grade 12 to all low caste students and all girl students
in the community schools. There have
been plans for the quality educations since long but most of the plans are just
in the books and papers. Program has been formulated so as to eradicate
illiteracy within the next three years. To make this program more effective,
women of selected 12000 wards in the first phase will be given priority to be
appointed as motivators.
The
health sectors have also got their slogans and plans for this period. Most of
the places of the country are beyond the reach of quality health services. Now
they have been put forward with the improvement of health services through
health post and hospitals.
With a
view to build sustainable, private sector friendly, transparent and
self-reliant economy through maximum utilization of domestic resources, and
developing the equitable tax system, Mobilization of revenue through
administrative reform , tax collections, export import balance, industries and
revenue leakage control have been taken under the policy figure points for
revenue generation. In order to make the
people involved in the registration process of land and house transactions more
professional and respectful, arrangement will be made so that only persons
having Permanent Account Number (PAN) will be eligible for such
transactions. Various plans have been
created for the collections and utilization of taxes and revenues.
Most of
the areas covered by the current budget allocations are not the new sectors in
the budget books but they are the most critical sectors the economic
development of the country. The most important and most popular arrangement of
this budget is the salary increment of the government employees. The salary has
been increased from 35.35% to 42.86%. This is quite good but not in the proper
sense of economic movement. This will lead to the market price increment from
10% to 17%. The increment of price in Nepal is not a new thing and the
government has promised to control the price increment within 7% but that is
very difficult to maintain. This is the country where people could not bargain
on their daily goods. Every increment in
price should be paid up by the consumers, who even not care about bargaining.
This will lead to the more expensive market products and the quality goes down.
The most affected people will be the lower class people, who have to work whole
day to get a handful for rice for the day treat.
Overall
the budget is not as good as expected to be. Most of the issues have not been
considered. The lack of proper background work and planning could be observed
in the budget of the country. Most of the plans seem hypothetical and beyond
the reach of the Nepalese economy. The financial condition is deteriorating day
by day and the government is flooding more money into the market, which will
ultimately affect the whole economy. Foreign
Direct Investments have been taken as a major source of funds. But there should
be proper political and economic environment for the FDI. The people will never
invest in a market where the risk percentage is very high above the gain
percentage. Thus the government should be able to prepare strategies and plans
to create a investment friendly economic scenario in the country. Whatever the budget may be, however it has
been made, let’s hope it will implemented properly wherever it has been
allocated and for the better result. Let’s hope it won’t be another package of
slogans and promises, which always turns out to be another worst allocation of
funds.
